Europe|Angela Merkel Strikes New Deal With Old Partners, at a High Cost

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Angela Merkel Strikes New Deal With Old Partners, at a High Cost

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Chancellor Angela Merkel of Germany in Berlin on Wednesday with Horst Seehofer of the Christian Social Union, center, and Martin Schulz of the Social Democrats, right, after talks to form a coalition government.CreditCreditAxel Schmidt/Reuters

BERLIN — After more than four months of tortuous negotiations, with her fate and Germany’s hanging in the balance, Chancellor Angela Merkel on Wednesday announced a deal for a new government.

But it was telling that Ms. Merkel, in power for 12 years, looked more weary than jubilant.

The new deal with the same old coalition partners — her conservative alliance and the left-leaning Social Democrats — is precisely the government that Germans had voted against in inconclusive elections last September. It leaves the far-right Alternative for Germany as the country’s leading opposition party. And it comes at a high cost for Ms. Merkel, the incredible shrinking chancellor, who had to relinquish key ministries.

But what is troubling for many Germans is not necessarily bad news for Europe, which for years has depended on stability in Berlin and has been waiting in limbo as Ms. Merkel stumbled toward a deal.

The new arrangement must still be approved by the Social Democrats’ rank and file. But if endorsed, the coalition may provide France’s new president, Emmanuel Macron, with the partner he has been looking for to help buck up the European Union and move it away from the austerity policies that were identified with Ms. Merkel’s old team and often blamed for stifling growth.

“Good news also for Europe!” tweeted Pierre Moscovici, the French finance commissioner of the European Union.

In the new coalition, the powerful German Finance Ministry, once led by a hard-line Merkel ally, Wolfgang Schäuble, will be run by a Social Democrat. The party was critical of the government’s tightfisted policies and may prove more flexible.

“A slightly weakened Germany could be one of the things that helps create a sense of a more balanced Europe,” said Mark Leonard, director of the European Council on Foreign Relations in Berlin.

“Certainly, the fact that Wolfgang Schäuble is not finance minister will be greeted with enormous relief,” he said, referring to anger in parts of Europe over painful austerity measures after the eurozone crisis.

It is hard to overstate the scope of German influence over European affairs during the Merkel era, especially in economic policy. Following the 2007-08 financial crisis, Mr. Schäuble became the face of the German-led austerity policies imposed on debtor countries like Italy, Spain, Portugal and, especially, Greece. Even as the Obama administration and an array of economists called for looser policies, the Germans held firm.

Beyond economics, Ms. Merkel has been the rock of European foreign policy, demanding a tough line on maintaining economic sanctions against Russia after the conflict in Ukraine while other European countries were far less enthusiastic.

And it has been Ms. Merkel who has pointedly stood up to President Trump, to the cheers of many Europeans and others who have embraced her as a defender of the liberal order.

But now the political landscape has shifted, not only in Germany, but also elsewhere in Europe.

The rise of Mr. Macron in France, if celebrated by those who support a stronger European Union, is also being interpreted as a rebalancing of power away from Berlin.

But France still needs Germany, not least to help bridge a growing rift between east and west on the Continent. Nationalist leaders in Central and Eastern Europe, led by Hungary’s prime minister, Viktor Orban, are challenging the liberal consensus at the heart of the European bloc.

The window to reshape Europe is short: Come fall, the last leg of the Brexit talks, a hard-fought election in the German state of Bavaria and the prospect of European elections will make it harder.

The answer of Ms. Merkel and the Social Democrats — in no small part to persuade Germans that their “grand coalition” straddling left and right was still needed — was to cast their lot fully with the mission to salvage the European project.

In what is otherwise a fairly unexciting governing pact, the Europe chapter — short and vague, but prominently displayed on the first five pages of the 177-page document — stands out.

“A New Departure for Europe!” its ambitious headline reads, before listing proposals that include working toward greater powers for the European Parliament and creating a European Monetary Fund to help protect the eurozone against financial crises. Not all of Mr. Macron’s most prominent proposals, like a European finance minister, are featured in the coalition document.

But Germany will increase its contribution to the European Union budget, the paper pledges. And it will cooperate with Europe on defense and migration.

“It’s the first time that Europe is the first chapter in a German coalition treaty,” said Henrik Enderlein of the Hertie School of Governance in Berlin. “This is a clear signal that the government wants to work with President Macron on reforming and strengthening Europe.”

“On the open-to-closed spectrum, this was a signal for openness,” he added.

But unlike in France, where Mr. Macron ran on a transparently pro-European platform, campaigning with a European flag and playing the European anthem on election night, Europe hardly featured on the German campaign trail.

“The challenge is that this was never tested in a real election,” Mr. Leonard said.

Alternative for Germany immediately dismissed Wednesday’s deal as proof that Europe’s elites were ignoring the concerns of ordinary voters once again.

“One wonders, why Mr. Macron doesn’t just move into the Chancellery,” scoffed Alexander Gauland, a former member of Ms. Merkel’s conservatives who became a lawmaker for Alternative for Germany, known as the AfD. Ms. Merkel’s conservatives, he said, had betrayed their values and become “an empty shell.”

The fact that the Interior Ministry’s portfolio was broadened to include a “heimat” — homeland — department to address issues of identity and integration did nothing to appease the AfD. Björn Höcke, a well-known far-right firebrand in the party, called the coalition deal “un-German.”

Speaking to reporters on Wednesday afternoon, a tired-looking Ms. Merkel praised the deal as the “basis of a good and stable government, which our country needs, and which many around the world expect from us.”

For many, the coalition deal represented a bittersweet success, a sort of short-term fix with potentially steep political costs: a backlash in the making that could push ever more voters to the extremes.

In the two years since Ms. Merkel opened Germany’s door to more than a million migrants, the country’s political landscape has changed drastically, and much of the chancellor’s ability to forge consensus has eroded.

All three parties now returning to government had their worst election results since the 1940s.

“The Merkel era is synonymous with a strong and stable Germany; that’s what we had for the last decade,” Mr. Enderlein said. “That era is coming to an end. And we don’t yet know what comes after.”

There is no guarantee that this coalition will last a full term, he said. There is not even a guarantee that it will happen: The unhappy grass roots of the Social Democratic Party still need to approve it by postal ballot and many balk at the thought.

Two stints as Ms. Merkel’s junior partners saw the party’s vote share slump from 34 percent in 2005 to 20 percent in September. Recent polls give it 17 percent support, just two percentage points more than the AfD. Some worry that another four years in a coalition could see the AfD overtake the Social Democrats.

But the alternative may be no better: If the coalition collapses and Germany is forced to call a snap election, the extremes will benefit — both inside and outside the main parties, analysts predict.

“This is the worst possible outcome,” said Mr. Leonard of the European Council on Foreign Relations, “except for all the other ones.”

Correction:

An earlier version of this article erroneously attributed a distinction to the Social Democrats. The party had control of the Finance and Foreign Ministries from 2005 to 2009. It is not a first for a junior coalition party.